EMERGING MARKETS-Emerging stocks in worst losing streak since May 2016

LONDON, Sept 28 (Reuters) - Emerging equities hit one-month lows on Thursday, set for their longest losing streak since May last year, and Turkey's lira and South Africa's rand touched multi-month lows as the dollar and U.S. yields rose.

A 0.6 percent fall in MSCI's emerging stocks index extended the benchmark's sell-off into a sixth straight session. The dollar powered to near one-month highs and U.S. 10-year bond yields to near two-month highs.

U.S. assets have strengthened after the Federal Reserve signaled further interest rate rises and on hopes that tax reform proposals from President Donald Trump will strengthen the economy.

Trump has offered to lower corporate income tax rates, cut taxes for small businesses and reduce the top rate for high-earning individuals. Per Hammarlund, chief emerging markets strategist at SEB, said the package was "more aggressive" than the market had anticipated.

"The market is over-reacting he will have a tough time getting everything through Congress," he said, adding tax reform was as controversial as healthcare reform in the world's largest economy.

New orders for key U.S.-made capital goods increased by more than expected in August, strengthening the case for another rate rise before year-end.

Hong Kong shares were among the biggest laggards, down 0.8 percent, while Taiwan and Russia lost 0.3 percent and South Africa slipped 0.4 percent.

Currencies also took a pounding with China's yuan weakening over 0.4 percent to the lowest in more than a month against the dollar, having lost more than 3 percent of its value since hitting a 21-month high in early August.

The lira dipped to 2-1/2 month lows before recovering to trade flat, following a vote for independence by the Kurdish population in Iraq that investors fear may inflame separatist tensions in Turkey.

Hammarlund said that while the dollar and Treasury yields were the main factors driving down emerging currencies, the threat of military intervention was a contributing factor for the lira.

"That does worry the market as it would be ill-advised for Turkey to intervene it could really stir domestic violence as well," he said.

Turkey's 2030 dollar bond fell another 0.7 cents according to Tradeweb, plumbing a 2-1/2 month low, with the 2034 and 2036 issues slipping around 0.5 cents.

The rand touched its weakest since mid-May before also rebounding to trade flat. Thousands marched on Wednesday in anti-corruption protests organized by unions.

The Mexican peso hit its lowest since early July, with concerns that NAFTA trade negotiations could run into 2018, beyond an end-December deadline designed to skirt Mexico's presidential election campaign.

Mexico's central bank is expected to hold rates at 7 percent at its meeting on Thursday, amid signs that inflation is starting to fall.

South Korea's won fell 0.26 percent to a seven-week low, with the government expecting more provocations from North Korea in coming weeks, and the Russian rouble fell 0.2 percent to a one-month low, pressured by an oil price slide.

Hungary's forint continued to struggle against the euro in the wake of further monetary easing, weakening 0.2 percent to near five-month lows.

In international bond markets, Saudi Arabia completed a $12.5 billion triple-tranche Eurobond sale.

Egypt approved a eurobond program worth around $7 billion for the 2017-2018 fiscal year, state media reported, with the next sale expected before the end of 2017.

For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see) Emerging Markets Prices from Reuters

Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley

Emrg Mkt Indx 1072.44 -6.13 -0.57 +24.37 Czech Rep 1043.68 +1.18 +0.11 +13.25 Poland 2437.08 +3.26 +0.13 +25.11 Hungary 37415.28 +170.98 +0.46 +16.91 Romania 7918.76 +4.52 +0.06 +11.77 Greece 756.10 +19.46 +2.64 +17.47 Russia 1122.29 -4.65 -0.41 -2.61 South Africa 48773.25 -245.00 -0.50 +11.10 Turkey 02119.30 +901.01 +0.89 +30.69 China 3340.12 -5.16 -0.15 +7.62 India 31157.13 -2.68 -0.01 +17.02 Currencies Latest Prev Local Local close currency currency

% change % change

in 2017

Czech Rep 26.05 26.03 -0.05 +3.69

Poland 4.32 4.32 +0.12 +1.99

Hungary 311.49 311.23 -0.08 -0.86

Romania 4.60 4.60 -0.02 -1.34

Serbia 119.35 119.33 -0.02 +3.35

Russia 58.26 58.19 -0.13 +5.15

Kazakhstan 340.65 340.22 -0.13 -2.05

Ukraine 26.54 26.47 -0.26 +1.73

South Africa 13.58 13.58 -0.02 +1.08

Kenya 103.20 103.30 +0.10 -0.80

Israel 3.53 3.54 +0.22 +9.00

Turkey 3.58 3.58 +0.01 -1.38

China 6.67 6.64 -0.42 +4.13

India 65.63 65.71 +0.13 +3.53

Brazil 3.19 3.19 -0.00 +1.89

Mexico 18.21 18.20 -0.01 +13.78

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 310 -3 .02 8 01.27 1

(Reporting by Claire Milhench; editing by John Stonestreet)